Online payment processors are taking over the retail industry.
Why? Simple: the future is cashless.
It is estimated that more than 80% of purchases in the US for 2022 will be paid for using a non-cash method. Plus, online payment transactions are predicted to grow by more than 15% from 2020 until 2025.
The retail industry continues to boom and online payment processors make transactions easy for both shoppers and business owners. Thus, it’s very important for business owners to carefully select the best payment processor for their business.
What is an online payment processor?
An online payment processor provides a payment gateway. It allows merchants to accept credit card payments from customers—whether from eCommerce sites or brick-and-mortar stores.
The processor provides the payment interface. In online transactions, this is the part where the customer enters their payment information and credit card details during the checkout process.
For business owners:
The online payment processor gives merchants a simple and secure way to collect payments from credit cards, debit cards, and mobile wallets.
Put simply, payment gateways provide seamless transactions and they are directly involved in your finances. That being said, your payment processor must be secure, flexible, and convenient.
What to consider when choosing your online payment processors
The ultimate goal of integrating a payment processor is to increase your revenue. How? By providing a smooth customer journey for consumers. Plus, it should improve operations and administrative processes for the business side.
Here are the major factors to look into as you make this critical decision:
Integrated banks and payment methods
At the bare minimum, online payment processors should be able to accept all major credit card brands and e-wallets. If the customer’s credit card brand isn’t integrated with the store’s payment processor, a sure purchase might turn to dust.
Reputation and credibility
The online payment processor of your choice should be reliable when it comes to tech. It should be stable, secure, and not prone to constant bugs and crashes. Keep an eye out for payment processors with good reviews from fellow merchants.
Pricing plans and other additional costs
Here’s a fact: it costs businesses extra money to accept non-cash payments.
In the end, signing up for a payment processor is an investment. How much of your income are you willing to put towards processing fees? How much are you willing to allocate for a monthly subscription to an online payment processor?
Customer experience for shoppers
Did you know that 87% of online shoppers will abandon their carts if the checkout process is too long or too complicated? So what should you do? Shortlist the online payment processors that can provide the best checkout experience for your customers.
The easier it is for consumers to pay for their transactions, the smoother their customer experience is. Result? Repeat purchases and return customers.
Features and tools
Most online payment processors provide other services aside from processing payments. It’s useful to have various tools at your disposal—invoicing, changing subscription settings, customizing the checkout page, and more.
Good customer support
Payment solutions should be reliable and stable. But in the case of a technical bug or a malfunction, it should be easy to contact customer support and solve the issue. There are payment processors that offer 24/7 customer support so issues can be solved quickly.
6 online payment processors to choose from (or to combine)
It goes without saying that there are a lot of processors to choose from. So we’ve done the work and compiled a list of processors to choose from—including what makes them great and what to watch out for.
PayPal (best for first-time users)
If you’re just starting out, PayPal is a great first payment processor to try. It’s simple and straightforward for both consumers and business owners.
Here are some of PayPal’s important features:
- Accessible – Customers can pay with their PayPal balance or any saved payment method on their account. If they don’t have a PayPal account, they can simply enter their credit card details and the payment will go through.
- Secure – PayPal has security measures in place. Fraud protection keeps the store safe from credit card fraud. Meanwhile, customer protection helps shoppers file complaints or claims in case there are any issues with the product or the delivery.
- Integrations – PayPal can be connected to your CRM or email marketing tool so you can automatically update your contact lists and customer database.
- Customizable – Business owners can customize invoice schedules, setup fees, billing cycles, trial periods, and even recurring payments for subscription businesses.
One thing to note: transaction fees can be very confusing. PayPal charges a base fixed price plus a percentage for each transaction, which varies per transaction type and currency.
Stripe (to access in-depth analytics)
Compared to PayPal, Stripe is not that intuitive. However, once you get used to it, you’ll be amazed at what it can do. For example:
- Implementation Wizard – Choose how you want to implement Stripe by answering a few questions. You will then get a complete guide that will help you set up your preferences on your eCommerce store.
- Ready-made plugins – Because of Stripe’s popularity, eCommerce platforms like Shopify or WooCommerce already have Stripe plugins so you can integrate the payments easily.
- Comprehensive data insights – Stripe gives business owners information about sales volume, revenue reports, reports on frauds or returns, average spend-per-customer, and even forecasts.
- Simple and straightforward fee structure – Stripe doesn’t charge monthly subscription fees and set-up fees. It’s 2.9% plus $0.30 per transaction using credit cards. While there are different costs depending on payment methods, Stripe’s pricing page is very direct and clear.
- 24/7 customer support – Large businesses with a huge volume of transactions will find this very useful.
Additionally, Stripe integrates with Recover Payments to help recover failed payments and improve overall customer retention.
Gumroad (focus on individual items)
Gumroad is another alternative for selling both physical and digital products:
- Courses or tutorials
- eBooks, audiobooks, and other resources
- Membership plans or subscriptions
- Physical products
Business owners can set up their own page where all product details are laid out. From this page, customers can checkout directly. The page can also be embedded on a website or a blog post—once clicked, customers will go through the Gumroad checkout process.
As for fees, Gumroad has no monthly charges. Instead, they just take a small percentage from every sale.
Amazon Pay (to leverage Amazon’s brand and payments infrastructure)
Amazon Pay basically lets Amazon customers shop from non-Amazon websites easily and seamlessly. Their stored payment details on Amazon can be conveniently used to pay for their purchases from other websites. For non-Amazon customers, Amazon Pay can handle transactions from credit and debit cards.
Domestic and global transaction fees vary accordingly. If a customer orders via Alexa, there will be a corresponding surcharge.
A lot of eCommerce brands have reaped success by using Amazon payments because of its large customer base (200 million Amazon Prime members).
Recharge (for subscription-focused businesses)
Recharge is an online payment processor that focuses on growing subscription businesses. The platform makes it easy for customers to manage their subscriptions directly from their account dashboards. This then contributes to an overall improvement in the customer experience which increases customer satisfaction.
For business owners, Recharge helps in setting up subscriptions as well as retrying failed payment attempts automatically. Recharge also integrates with Recover Payments for an enhanced payment recovery process.
Verifone (formerly 2checkout)
Verifone is quickly gaining popularity because of its many features. Supporting multiple currencies and languages, Verifone also handles tax management and compliance on top of payment processing.
You have three different pricing plans for three different business models:
- 2SELL – businesses who want to sell successfully globally
- 2SUBSCRIBE – for growing and developing subscription-based businesses
- 2MONETIZE – for selling digital goods globally
Business owners also have a lot of add-ons to choose from like A/B testing, subscription management, and customer support.
Wrap-Up: Cover all bases with the right online payment processor coupled with a failed payment recovery strategy
Remember, you must ensure that every step in your customers’ journey is easy and convenient.
To be totally honest, all of these online payment processors are top-tier. Your final decision will depend on your preference, your customer’s preferences, and what will work best for your business. Do take the time to explore them before making your final decision. Some of them offer free trials or demos, so don’t skip those.
Once you’ve got your online payment processor set up and ready to work, the next step is to cover all bases. Even the best and most trustworthy payment platforms are not immune to involuntary churn caused by failed payments.
Reasons for failed payments include maxed-out credit cards, expired credit cards, or wrong billing details. Keep in mind that these are all involuntary, which means that customers didn’t mean for these payments to fail.
Sync Recover Payments with your payment processing system and uncover the revenue you are actually losing. You might be surprised.
Consult with a failed payment recovery specialist to get a tailored strategy on how you can recover your lost revenue. It’s not too late.